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Special> China International Fair For Investment & Trade> Beijing Review Exclusive> Legal-Ease
UPDATED: November 18, 2008 NO. 47 NOV. 20, 2008
Multinationals Move Inland II

Central China, initially overlooked by many foreign investors as being too far from the ports in Tianjin, Shanghai and Shenzhen, is emerging as an essential destination for multinationals in China.

The Future of Central China:

A Provincial Roadmap

There is a huge manufacturing drive in central China. Businesses are moving inland to set up projects, investments and operations here, primarily due to lower labor and land costs as well as preferential policies for manufacturers. Multinational companies also are starting to view the region as the next step toward an integrated China strategy, and the consumer population in the second- and third-tier cities in central China represents a growing, largely untapped domestic market for foreign products and services.


Anhui, a province that traditionally has focused on agriculture, is attracting big international investors as the costs of land and labor rise in China's coastal regions. In 2007 alone, 499 new foreign enterprises had established presences in the province.

Anhui's main draw--low wages and cheap land--will continue to provide incentives for FDI in the years to come. The provincial capital Hefei, a six-hour bus ride from Shanghai, accounts for about 30 percent of the total investment in the province.

Anhui also is profiting from processing trade restrictions that are forcing manufacturers in Guangdong and the Yangtze River Delta region to move their operations inland. One of the biggest selling points is electricity. Zhejiang and Jiangsu provinces have experienced shortages that Anhui, with a power capacity of 15.8 million kw, has not. Four more power projects were approved last year and will increase capacity to 30 million kw when they become operational in 2010.


Henan will continue to invest heavily in its agricultural future. Rice and grains such as wheat are major products of the province, and China's ever-growing food demands will see that crop yields will need to be consistently high. Hi-tech research is required, and government policies will ensure that more R&D investment is put in the province. Hi-tech industries also are setting up here in a number of development zones, many of which were opened around 2003 and are growing rapidly thanks to favorable incentives.

As with most of central China, Henan is also continuing to upgrade its road and rail infrastructures with particular emphasis on highways linking to coastal areas.


The future of Hubei is largely dependant on the success of the Three Gorges Dam project and the accompanying development of Chongqing as a major industrial and commercial center. As a result of the Three Gorges Dam project in combination with the "Go West" policies, there have been many upgrades of Hubei's river ports, and there is likely to be many more as larger volumes of cargo are transported up and down the river.

Wuhan intends to turn itself into the major manufacturing hub of central China. With the flow of river traffic from the Three Gorges and government incentives to move manufacturing inland, Wuhan is more than likely to succeed in this aim, with further enterprises linked to exports and distributors likely to find a base in the city as a result of the boom in manufacturing and the need for middlemen.

Hubei will continue to lead in the development of renewable energy resources with massive investments continuing to pour into the Three Gorges Dam project. Further demand is likely to be placed on what is already the world's largest hydropower project as China seeks alternatives to coal and other types of dirty energy.


Hunan plans to invest more than $200 billion in infrastructure development in 2006-11.

Road and rail transportation networks are continuing to develop as the central provinces desperately attempt to keep up with the east coast in terms of accessibility and convenience as well as transportation costs.

A large portion of Hunan's industrial output is related to its rich mineral deposits, with the smelting and pressing of ferrous and non-ferrous metals accounting for 19.6 percent of the total industrial output. Related manufacturing industries have been relocating to Hunan in recent years from Guangdong, Zhejiang, Beijing, Fujian and Shanghai.

In the future, mining will continue to be a major industry in anything from coal to uranium, and the Central Government will be keen to see more foreign investment-look for foreign/Chinese joint ventures in this industry to provide a large portion of FDI in Hunan.


Jiangxi is rich in natural resources and is a major source of timber and bamboo products in China. It ranks first in China in deposits of copper, silver and uranium. Additionally, it remains heavily agricultural, a trend that looks likely to continue in the south of the province. There is a great need to further increase infrastructure, especially roads and rails. The province's location between the two major industrial hubs of the Yangtze River Delta and the Pearl River Delta places it at the crossroads of the nation's two largest economic engines.

The province has been pushing a policy of industrialization in recent years, and foreign investors include PepsiCo Inc., Metro AG and Toshiba Corp. Expect more manufacturers to set up operations along the popular Nanchang-Jiujiang Industrial Corridor, situated along the Nanchang-Jiujiang Expressway, as costs in neighboring Zhejiang, Fujian and Guangdong provinces increase.

Tourism is one of the major hopes here as the far west of the province is becoming more popular and accessible for those traveling along the old Silk Road routes. The southern part of the province is becoming popular with those wishing to visit sections of the Great Wall away from the heavily visited areas near Beijing.

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